Discussions concerning dispute settlement reform
Marco Molina, Deputy Permanent Representative of Guatemala to the WTO, reported to members in his personal capacity on the informal meetings he was asked to convene by a group of WTO members on the issue of dispute settlement reform. The objective is to fulfil the June 2022 ministerial mandate of having a fully and well-functioning dispute settlement system accessible to all members by 2024.
Mr Molina said members are making every effort to deliver at the first available opportunity in 2024, namely the 13th Ministerial Conference (MC13) at the end of February. For more than 20 months, members have been identifying and understanding interests, concerns, conceptual approaches and specific solutions that reflect the diverse views and perspectives of all WTO members. For the past 10 months, the focus has been on identifying optimal solutions to the issues raised by members, he added.
Mr Molina emphasized that the “informal” nature of the process now underway does not diminish its importance, structure or inclusiveness. On the contrary, it follows a solution-oriented, multilateral, open, transparent, inclusive and bottom-up approach. In a remarkably brief timeframe, members have successfully developed a consolidated draft text, now in its third revision and nearing finalization, he said.
Mr Molina said he has constantly adapted the process to ensure full participation, particularly in addressing capacity constraints of some members. Anticipating clashes with other meetings in the coming year, remote participation will be introduced upon request for Geneva delegates with capacity constraints.
In terms of substance, significant achievements have been made, Mr Molina said. Members are nearing the finalization of a comprehensive and meaningful reform package designed to benefit and address the interests and concerns of all. The third revised draft text provides a clear statement of members’ understandings and expectations regarding the operation of the dispute settlement system, with the focus on providing incentives and disincentives to influence the behaviour of all participants in the system and ensure it operates more efficiently to promptly resolve disputes, he said.
“We are approaching the conclusion of this process, though some issues still warrant further discussion and attention,” Mr Molina said. Discussions on these challenging questions have been fruitful, and members are now identifying potential solutions that can accommodate the diverse perspectives expressed by members. In the coming weeks, the focus will be on reviewing and refining the third version of the consolidated text, with a first cluster of plenary sessions scheduled for 10-12 January.
“The finish line is within reach,” he said. “We must persevere, for every step brings us closer to achieving our common goal.”
Twenty-four members took the floor to comment. While many members thanked Mr Molina for his work and welcomed the progress made so far, several members said some critical issues remain pending, in particular the future of the WTO’s Appellate Body. Members continued to express different views on whether the discussions should continue to be carried out on an informal basis or now be “formalized” by bringing the talks onto the work agenda of the Dispute Settlement Body and/or General Council.
Several members welcomed Mr Molina’s decision to allow virtual participation in the informal process by Geneva-based delegations, although some called on him to extend this to capital-based officials, citing capacity constrains with their Geneva delegations.
DS591 Colombia — Anti-Dumping Duties on Frozen Fries from Belgium, Germany and the Netherlands
Colombia told members that, as reported at the last DSB meeting on 27 November, it has issued a resolution which has put an end to an administrative review of the anti-dumping duties conducted by its investigative authority. Under this resolution, Colombia looked at different aspects of the initial determination to adjust the calculation of anti-dumping margins at issue, and addressed the issues of confidentiality and the analysis of injury and causality in the investigation. As a result, all anti-dumping duties were subsequently reduced significantly, Colombia said.
The European Union said it did not agree that Colombia had fully implemented the ruling; Colombia maintained and even in certain cases increased the anti-dumping duties for the EU companies investigated, which appears inconsistent with the WTO’s Anti-Dumping Agreement and with the award of the arbitrators in the dispute. The EU said it reserved its WTO rights, including the right of recourse to dispute compliance proceedings, and is now considering next steps.
DS285 United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services: Update by Antigua and Barbuda
Antigua and Barbuda note that this year marks 20 years since it requested consultations with the United States regarding measures applied by central, regional and local authorities in the US which affected the cross-border supply of gambling and betting services. It is also 20 years since the panel circulated its report in the dispute, and two years shy of two decades since the Appellate Body circulated its ruling on the matter following the US appeal against the panel report.
The lack of progress with respect to compliance is a disappointing reality, Antigua and Barbuda said, and further delay is not an option. DS285 is regarded as a test case for those WTO members seeking to determine whether the dispute settlement system can deliver practical and timely benefits for small and vulnerable economies, Antigua and Barbuda said. It called on the US to make every effort to bring this matter to a satisfactory conclusion and said it remains open to engaging with the US in whatever format to settle the dispute in a mutually satisfactory manner.
The United States said it is disappointed that Antigua and Barbuda continues to characterize the US as not making any attempt to resolve the dispute. Much to the contrary, the United States has repeatedly tried to resolve this dispute in a way that would bring benefits to Antigua and Barbuda’s economy and to its citizens. The US said it remains ready and willing to work with Antigua and Barbuda to settle this dispute. However, such efforts must be rooted in a genuine willingness to find a solution, it added.
St Vincent and the Grenadines, speaking on behalf of the African, Caribbean and Pacific (ACP) Group, said it remains disappointed that this dispute was initiated and has yet to be fully resolved. This lack of resolution, in particular the non-compliance of the world’s largest economy in a matter involving one of the smallest WTO members, undermines the rules-based system of adjudication, it said.
Bangladesh, South Africa, India, Nigeria (for the African Group) and China also took the floor on this matter to encourage a settlement to the dispute.
DS597 United States — Origin Marking Requirement (Hong Kong, China)
The United States once again raised the matter of the panel ruling in DS597 at a DSB meeting. The US referred back to its previous statements regarding its position on essential security and its reason for placing this item on the DSB agenda. It then updated the DSB on what it said were factual developments regarding human rights and freedom of speech in Hong Kong, China which justified the measure at issue and reinforced US concern with the panel findings. The US fundamentally disagrees with the panel’s approach, which suggests a state ought to defer consideration of its essential security interests until after a breakdown in relations with another member, it said.
Hong Kong, China criticized the United States for putting this item for the seventh time on the DSB agenda despite the fact the US has appealed the panel report. It criticized the US for failing to avoid repetition of issues as set out under Rule 27 for DSB meetings, and strongly objected to the US characterization of recent developments in Hong Kong, China.
China said it had serious concerns about the US bringing this matter up again at the DSB. Should the US have concerns about how the panel ruled on the national security exception, it should work with members to restore the appeal mechanism, which is the proper place to correct possible errors of the panel, China said. China rejected what it said were the false US allegations about the situation in Hong Kong, China and criticized the US for interfering in another member’s internal affairs.
DS582 Statement by the European Union regarding the panel report in the dispute on “India — Tariff Treatment on Certain Goods in the Information and Communications Technology Sector”
The European Union said it welcomed the panel report in DS582 which backed the EU’s central claims and found that India’s tariffs on the products in question are in excess of its WTO commitments. EU companies have been negatively impacted by India’s excessive import duties on information and communications technology (ITC) products since 2014, the EU said, at a time of enormous developments in the sector, including the rollout of 4G and 5G networks in India.
The EU said that despite numerous efforts by the EU to find a solution with India to resolve the dispute, India decided to appeal the panel ruling on 8 December. The EU said that while it recognizes India’s right to appeal, it deeply regrets that India did not avail itself of the opportunities which the EU repeatedly offered to have this matter adjudicated through appeal arbitration. In these circumstances, the decision to appeal before a non-functioning Appellate Body effectively deprives the EU of its right to have the dispute resolved through adjudication and demonstrates once again the grave consequence of the blockage of Appellate Body member appointments.
India said its long-standing position on the Appellate Body crisis and the implications of interim arbitration arrangements is that such interim arrangements undermine the right of members to appeal to a permanent standing body, which is fundamental to the multilateral trading system. India said it hopes that the early restoration of the Appellate Body will enable correction of the errors in the panel report and the expeditious resolution of this dispute.
Japan expressed its disappointment at India’s decision to appeal the panel report, as India did in Japan’s own case against the ITC tariffs. It said the only consequence of India’s decision is to delay the implementation of the ruling, which is contrary to the bedrock principle of prompt compliance with rulings and the prompt settlement of disputes enshrined in WTO dispute settlement rules.
Canada, Russia and China also said the dispute was another example of the negative impact of the Appellate Body appointment blockage on dispute resolution. Both Canada and China called on WTO members, including the parties in this dispute, to join the Multi-party interim appeal arrangement (MPIA) in order to maintain appeal rights in the absence of a functioning Appellate Body.
DS588 India — Tariff Treatment on Certain Goods in the Information and Communications Technology Sector
India and Chinese Taipei requested additional time for the DSB to consider for adoption the panel rulings in the case initiated by Chinese Taipei regarding India’s tariffs on certain high-tech goods. The parties asked that the DSB further delay consideration of the panel reports until 26 April 2024 in order to help facilitate resolution of the disputes. The DSB had agreed to two previous requests from India and Chinese Taipei to delay consideration of the reports.
The DSB agreed to the latest requests from Chinese Taipei and India.
Appellate Body appointments
Guatemala, speaking on behalf of 130 members, introduced for the 72nd time the group’s proposal to start the selection processes for filling vacancies on the Appellate Body. The extensive number of members submitting the proposal reflects a common concern over the current situation in the Appellate Body which is seriously affecting the overall WTO dispute settlement system against the best interest of members, Guatemala said for the group.
The United States repeated that it does not support the proposed decision to commence the appointment of Appellate Body members as its longstanding concerns with WTO dispute settlement remain unaddressed. The US said it believes fundamental reform is needed to ensure a well-functioning WTO dispute settlement system. The goal for the United States is not to return to the old system but to have a system that preserves the policy space in WTO rules for members to address their critical interests and that supports, rather than undermines, the WTO’s role as a forum for discussion and negotiation, the US added.
Twenty-five members then took the floor to comment, with two of them speaking on behalf of groups of members. Many of these members again noted the commitment made by ministers at the WTO’s 12th Ministerial Conference to engage in discussions aimed at securing a fully functioning dispute settlement system by 2024. They pledged their support for securing an outcome, citing the importance of a fully-functioning system to the security and predictability of the multilateral trading system. Several referenced the informal discussions on dispute settlement reform now underway, while others made reference to the MPIA as a temporary alternative means available to securing an appeal review while the Appellate Body remains non-functioning.
Guatemala said that on behalf of the 130 members it regretted that for the 72nd occasion members have not been able to launch the selection processes. Ongoing conversations about reform of the dispute settlement system should not prevent the Appellate Body from continuing to operate fully, and members shall comply with their obligation under the DSU to fill the vacancies as they arise, Guatemala said for the group.
Surveillance of implementation
The United States presented status reports with regard to DS184, “US — Anti-Dumping Measures on Certain Hot-Rolled Steel Products from Japan”, DS160, “United States — Section 110(5) of US Copyright Act”, DS464, “United States — Anti-Dumping and Countervailing Measures on Large Residential Washers from Korea”, and DS471, “United States — Certain Methodologies and their Application to Anti-Dumping Proceedings Involving China.”
The European Union presented a status report with regard to DS291, “EC — Measures Affecting the Approval and Marketing of Biotech Products.”
Indonesia presented its status reports in DS477 and DS478, “Indonesia — Importation of Horticultural Products, Animals and Animal Products.”
Next meeting
The next regular DSB meeting will take place on 26 January 2024.
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